Briefly:

(April 23, 2004) Pension fund returns continued to grow in the first quarter, buoyed by strong performance in their stock portfolios, according to Mercer Investment Consulting.

“The major equity market indices posted very solid returns in the first two months of the year with a modest reversal in March,” said Marcel Larochelle, practice leader for Mercer Investment Consulting in Canada. “Managers of discretionary balanced pooled funds, stimulated by these equity markets along with bond markets, posted a median return of 3.9% for the quarter.”

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CI launches Pro-Fit Notes

(April 23, 2004) CI Mutual Funds has teamed up with Skylon Advisors to offer CI Pro-Fit Notes Series 2, a principal-protected product offering growth through three CI funds.

“For investors who want to get back into the markets, the notes are a great way to participate without the worry of losing capital if they hold the notes to maturity,” said David R. McBain, Skylon president and chief executive officer. “Along with the capital protection, investors benefit from funds and portfolio managers with excellent long-term track records and the potential to produce outstanding returns.”

The notes are linked to the total return over an eight-year period of a portfolio equally divided between CI Value Trust Sector Fund, CI Canadian Investment Fund and Signature High Income Fund.

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CIBC sees slower growth ahead

(April 22, 2004) CIBC World Markets think the Bank of Canada is a little too optimistic in its near-term economic forecasts, saying the growth rates for 2004 and 2005 should be 2.5% and 3.2% respectively.

Chief economist Jeffery Rubin predicts a poor job market will lead the Bank of Canada to cut its overnight lending rate to a 46-year low of 1.75%. The drop in our rate, coupled with rising Fed rates in the U.S., will send the loonie back down to about 72 or 73 cents US, he believes.

Rubin also sees the price of oil climbing as high as $40 a barrel as production capacity is stretched but world demand continues to grow. He predicts energy costs boosting inflation to nearly 2%.

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Pension outlook improving, says federal regulator

(April 22, 2004) The financial condition of private pension plans monitored by the Office of the Superintendent of Financial Institutions (OFSI) has stabilized since last year, but there’s still cause for concern.

Nick Le Pan, superintendent of financial institutions, says last year’s rise in equity markets helped boost pension plan assets; however, the effect was largely offset by increased liabilities due to interest rate declines.

OFSI estimates that 200 defined benefit pension plans had deficits at the end of last year, compared to 212 in June 2003. “Many of these deficits were modest,” Le Pan said in a Toronto speech, “less than 10% of plan liabilities.”

In addition, many plans don’t have the funding cushion they had three or four years ago, he added: “More plans are vulnerable to potential adverse changes in economic conditions or financial markets.”

To address potential problems, Le Pan says OFSI is attempting to proactively identify plans at risk and ensure that plan administrators take action. OFSI will also promote responsible plan governance, he added, and will maintain a “watch list” to track high-risk plans. There are currently 83 pension plans on OFSI’s watch list.

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CanDeal rolls out upgrade

(April 21, 2004) Bond trading platform, CanDeal has announced the release of its latest product upgrade, DealXpress, which it says “advances the state of straight-through processing” in the fixed income market.

“From a custodian’s perspective, DealXpress is able to provide us with clean trade instructions in electronic format,” said Robert Shier, CIBC Mellon’s senior vice-president and chief operations officer. “Trades that come to us through DealXpress shouldn’t require our intervention, and result in higher matching rates at the depository, which means we experience fewer trade exceptions.”

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Feds approve Manulife deal

(April 21, 2004) The federal government has approved Manulife Financial’s acquisition of Maritime Life, as part of the larger takeover of its parent firm, John Hancock Financial.

“I have been assured that policyholders’ existing insurance coverage will not change as a result of this decision, and that the treatment of affected employees will meet or exceed industry practices,” said federal Minister of Finance Ralph Goodale.

The transaction is expected to close April 28, 2004.

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New Brunswick tables new securities law

(April 21, 2004) New Brunswick has introduced new securities legislation aimed at giving that province’s businesses better access to capital and protecting investors from insider trading.

“A modern Securities Act will give New Brunswickers wanting to start or expand a business more opportunities to raise capital,” said Justice Minister Brad Green. “It will create greater investor confidence through increased protection against fraud. More investment in New Brunswick businesses means more jobs for New Brunswickers.”

Insider trading could be met with a maximum fine of $1 million under the new law, which will also create a new securities commission which will be an industry-funded, arm’s-length Crown corporation. The new law will also bring the province in line with the laws in other provinces.

The current securities law is the 70-year-old Securities Frauds Prevention Act.

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Many pensions unsure on privacy

(April 20, 2004) Many of Canada’s pension plan sponsors have not taken any steps to comply with the federal government’s privacy laws, according to a leading human resources consultancy.

In the April edition of its 60-Second Survey, Morneau Sobeco found that less than 60% of respondents had taken any action to implement changes required under the Personal Information Protection and Electronic Documents Act (PIPEDA). Six per cent didn’t even know what PIPEDA was and 11% thought it did not apply to their organization.

“I’m not surprised at the seemingly high number of provincially regulated organizations still dealing with this legislation,” says Kelley McKeating, privacy officer at Morneau Sobeco. “Particularly in B.C. and Alberta, the situation is confusing. As well, there are subtleties in the legislation as it pertains to employee personal information — something that adds to the compliance challenge.”

Provincially regulated organizations were to comply with the legislation by January 1 of this year, while federally regulated ones have were to be in compliance since 2001. Of these groups, 78% of respondents were found to be in compliance.

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EDC predicts export recovery

(April 20, 2004) Canadian exporters, hobbled over the past year by a soaring loonie, are set to rebound this year, according to a semi-annual report from Export Development Canada (EDC).

World economic growth is expected to hit “the high-water mark” of about 4% this year, driving export growth to 6%, according to EDC senior vice-president and chief economist Stephen Poloz.

“This projected increase in Canadian export sales in 2004-2005 is expected to be widespread across most major industries and will come as quite a relief for exporters, particularly after three years of declining revenues,” said Poloz.

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Foreigners sell off Canadian securities

(April 20, 2004) Foreign investors sold off about $7.6 billion in Canadian securities in February, according to a monthly report from StatsCan, in the largest divestitures in two and a half years.

Two-thirds of the sell-off was concentrated in bonds, with $4.7 billion in Canadian dollar denominated being sold. Foreign ownership of money market paper dropped by $1.6 billion and share ownership fell by $1.8 billion.

Meanwhile, Canadian investors picked up foreign securities, buying $1.3 billion in bonds. Share ownership increased as well, but largely due to payments in the form of stock derived from a takeover of a Canadian company.

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Canadian investors remain confident

(April 20, 2004) Canadian investor sentiment remained near a two-year high, according to Manulife Financial. The survey for the 21st quarterly Manulife Investor Sentiment Index was conducted in late March and found optimism toward most classes of investment.

“We saw a fairly strong market environment early this year and more Canadians were seeing positive developments, which was reflected in our December poll as well,” said Bruce Gordon, Manulife Financial’s executive vice-president and general manager of Canadian operations. “In December, we found all 10 categories gained strength and Canadians generally continue to stay focused on their long-term goals.”

The results do not mean that Canadians have suddenly become aggressive investors, though. The number-one investment remains the home, as mortgage principle was paid down and renovations made.

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Scotia offers tips on selecting an advisor

(April 20, 2004) Scotiabank is using Investor Education Month as a marketing tool to urge potential clients to take the plunge and choose a financial advisor.

“Talking to a financial planner, even if you don’t have a lot of money, can make a world of difference down the road,” says Bev Moir, a financial planner with ScotiaMcLeod. “Investing only a few dollars a month can lead to big savings and a nice nest egg.”

The bank offers tips to prospects, which an advisor may also want to focus on when speaking to potential clients. Scotiabank suggests the client focus on the level of comfort they have with an advisor; the advisor’s education as well as their philosophy and integrity; and the level of customer service offered.

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AGF European fund wins award

(April 20, 2004) AGF has won the Best European Equity Fund award from the AsianInvestor 2004 Awards for Achievement. The award reflects the five-year performance of the AGF European Equity Class, managed by John Arnold and Rory Flynn.

“AGF has long been a leader in global investing and this international award recognizes that we really deliver on this commitment,” said Clive Coombs, executive vice-president of AGF. “For nearly 10 years, the European equity team at AGFIA has been on the ground with a unique perspective bringing the world’s best expertise and performance to Canadian advisors and investors.”

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Ontario regulator reviewing risk questionnaire

(April 19, 2004) The Ontario Securities Commission (OSC) is reviewing risk mitigation structures and policies among advisors and fund managers. The request for information is a follow-up to a 2002 review.

“Now that we have used the risk assessment model for over a year, we are able to better understand where it could be improved and how we can streamline our information-gathering process,” said Marrianne Bridge, manager of compliance at the OSC. “Information from our market participants will help us to continue to focus the model so it provides top-notch guidance in our day-to-day compliance activities.”

The questionnaire aims to identify and target the most likely instances of non-compliance with securities laws, examining business activity, strategic and tactical management, adequacy of operational procedures and risk controls.

Advisors and fund managers will receive instructions on the information request and will be asked to complete the online risk assessment questionnaire by May 28, 2004.

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CIBC World Markets joins CBID

(April 19, 2004) CIBC World Markets has signed an agreement with bond quote and trade service CBID Markets, rival to the CanDeal network.

“We welcome the opportunity to work with CBID,” said Phipps Lounsbery, managing director, global head, Marketing Debt Capital Markets of CIBC World Markets. “Connecting to CBID provides us with a cost-effective and innovative method of distributing our fixed income products to Canadian retail clients.”

CIBC is not the first big player to sign with CBID, joining HSBC Bank Canada, JP Morgan Securities Canada, Laurentian Bank Securities and Merrill Lynch Canada as liquidity providers into CBID Markets’ Retail ATS.

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Ontario sets budget date

(April 19, 2004) Queen’s Park has announced the release date for its first budget under the new Liberal government in Ontario. Finance Minister Greg Sorbara will table the document on May 18, 2004.

“Our first budget will set out a plan that inspires a new generation of economic growth,” Sorbara said. “We will take a responsible, balanced approach to deal with Ontario’s serious fiscal challenges, and we will lay a solid foundation in order to deliver better public services.”

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(04/19/04)